Identity Theft: A Growing Scam in Trucking Industry

Posted in: Freight Factoring News, Freight Hauling Financing, Freight Hauling News- Mar 13, 2014 No Comments

A couple of years ago, I was a victim of identity theft. Someone filed a false tax return using my Social Security number and made off with a refund check. When I tried to file my tax return electronically, the IRS rejected it because “a return with that Social Security number has already been filed,” so I had to file a paper return and wait almost a year to get the situation cleared up and get my refund.

Identity theft (and more broadly, cyber-terrorism) is a growing problem, as the recent data breach at Target shows. But consumers are not the only victims. The problem is also evident, for example, in the trucking industry. One of the fastest growing forms of cargo theft is deceptive pick-ups (aka fictitious pick-ups). Here’s how the scheme works, as described in an AP article published last October (Thieves Pose as Truckers to Steal Huge Cargo Loads):

Thieves assume the identity of a trucking company, often by reactivating a dormant Department of Transportation carrier number from a government website for as little as $300. That lets them pretend to be a long-established firm with a seemingly good safety record. The fraud often includes paperwork such as insurance policies, fake driver’s licenses and other documents.

Then the con artists offer low bids to freight brokers who handle shipping for numerous companies. When the truckers show up at a company, everything seems legitimate. But once driven away, the goods are never seen again.

I first wrote about this problem almost three years ago, when I commented about a story in the New York Times about thieves that stole six truckloads of tomatoes and one truckload of cucumbers from Florida growers, along with a truckload of frozen meat, by setting up a bogus trucking company and deceiving a broker. Apparently, the fictitious pick-up problem is getting worse. According to a September 2013 white paper published by CargoNet and the Cargo Security Alliance, 8 percent of cargo thefts in 2013 (as of August 31, 2013) were due to fictitious pick-ups, up from 5 percent in 2011. And of the 1,192 cargo theft incidents reported to CargoNet in 2012, 73 were described as fictitious pick-ups, a 25 percent increase over 2011.

Here are some other interesting statistics from the report:

  • The average value of cargos stolen by fictitious pick-up was $203,744 vs. $174,380 per incident for cargo thefts overall during the study period, a 17 percent differential.
  • The commodities most frequently targeted for fictitious pick-ups are foods and beverages, electronics products and metals.
  • Over half of fictitious pick-ups occur at end of week, on Thursdays and Fridays when the main concern of shippers and brokers is in meeting a delivery date and satisfying the customer.
  • Fifty-five percent of all reported fictitious pick-ups from 2011 through 2013 occurred in California. Significant fictitious pick-up activity has also been reported in Florida, Texas and New Jersey.

Overall, cargo theft is on the rise, as FreightWatch International reported last week. Theft of vehicle and load made up 73 percent of all reported thefts, while deceptive pick-ups were the third most common type of theft. However, cases of deceptive pick-ups are growing so fast, that “within a few years, identity theft-related scams are expected to become the most prevalent method of cargo theft,” says Keith Lewis, Vice President of CargoNet.

The white paper referenced earlier includes seven best practices to prevent fictitious pick-ups. Here are my three simple tips to prevent cargo theft in general (or at least minimize the risk):

1. Keep the cargo moving. The longer a loaded trailer or container sits unattended, the higher the risk for theft. You should define limits on how long a loaded trailer or container can remain unattended under different circumstances. And you should collect data on where (and for how long) loaded trailers/containers sit along your supply chain to understand where you face the greatest risk for cargo theft. Just like you should “staple yourself to an order,” you should “strap yourself to a trailer” to find the inefficiencies in your transportation and delivery/receiving processes.’

2. Focus on the “hot spots” and “hot times.” Cargo theft is highly concentrated in just a few states, and if you drill down further, in certain cities, neighborhoods, and truck stops and other parking areas. Also, thefts occur more frequently on weekends (especially Saturdays) and they spike during holiday periods. So, focus your security efforts in the places and times they are most likely to occur.

3. Know who you are working with. Having your cargo stolen from an unattended lot is one thing, but getting deceived by a thief in broad daylight because you didn’t perform proper due diligence is simply inexcusable. Thieves are getting more creative and sophisticated, as the reported cases of deceptive pick-ups illustrate. This means you must have a robust carrier qualification process and follow it consistently. The same is true for the brokers you work with and the employees you hire. Trust, but verify.

Of course, there are many more actions you can take, including properly training drivers and other personnel on theft prevention, but the three simple steps above (which are obvious, but not always practiced) go a long way.

Now, what are the odds that a thief will steal my identity again, but instead of filing for a refund, pays my tax bill?

source-http://www.linkedin.com/today/post/article/20140313125323-1306443-identity-theft-a-growing-scam-in-trucking-industry

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